The former ministers for finance who gave evidence to the DIRT inquiry forcefully denied that they had turned a blind eye to the abuse of non-resident accounts for years because of a fear that any clampdown would trigger a massive outflow of money from the economy.
Each minister for finance who held office since the introduction of DIRT in 1986 told the Public Accounts Committee inquiry that the Revenue never complained about the inadequacy of their powers to police non-resident bank accounts. As for the banks, the former ministers indicated their total shock at the extent of tax evasion the banks facilitated during the 12 years being investigated.
The Taoiseach, Mr Ahern, said he hoped that institutions such as the banks, which were held up as "models of integrity and probity", would soon see that status restored. "Important questions need to be answered," he told the committee.
Former EU Commissioner Mr Ray Mac Sharry, who was responsible for the implementation of the DIRT legislation during his tenure at the Department of Finance in 1987, poured scorn on a piece of evidence submitted to the committee by AIB. The bank has claimed Mr MacSharry, gave an undertaking to its former chairman, the late Mr Niall Crowley, that the Revenue Commissioners would not inspect non-resident declarations held at its branches to verify their bona fides.
Mr MacSharry "emphatically denied" AIB's account of a meeting which is documented in a note held by the bank. He stressed he did not attribute the contents of the document to Mr Crowley. "I wonder who wrote it. That unsigned, undated note has led to a lot of confusion here and should be treated as it is, an unsigned and undated note," he told the committee.
The ministers also expressed amazement at the scale of the abuse of non-resident accounts at the State-owned ACCBank. Each minister bore responsibility for the bank and appointed an official from the Department to represent its interests, but they were never made aware of that problem.
Former Taoiseach Mr Albert Reynolds admitted that if the extent of the abuse of these accounts at ACC highlighted in the Comptroller and Auditor General's Report is proven, its competitors could hardly be expected to have taken the DIRT legislation seriously. "Surely, the last people you would expect would be State organisations, to in any way try to get around it."
More worryingly for the bank, the Labour leader, Mr Ruairi Quinn, recommended that whatever DIRT liability was ultimately established for ACC should be reflected in its price when it comes to the stock market next year.
It was not until 1992 that alarm bell began to ring about bogus non-resident account at the Department of Finance. Mr Ahern explained the Revenue was beginning to enjoy considerable success in dealing with tax evasion where monies were being concealed through bank accounts. He acknowledged there was no political appetite to give the Revenue the power to examine bank accounts, largely because of the fear of a public outcry, but said these powers were eventually granted in the 1999 Finance Act.
When the committee reconvenes next week the focus will again shift to the Revenue Commissioners and AIB. A new document submitted in evidence on Tuesday has given the committee a fresh line of inquiry in its efforts to determine whether the Revenue agreed to write off up to £100 million in unpaid DIRT for the bank.
That document details a conversation between the former Revenue chairman, Mr Cathal Mac Domhnaill, and senior AIB officials, which the bank claims supports its argument that the amnesty was granted with the full approval of the board of the Revenue. It also shows that shortly after the current chairman, Mr Dermot Quigley, took over last year, a further telephone conversation took place which, it is said, refutes what was said by his predecessor.
After five weeks, the committee has made significant progress in establishing where any wrongdoing lies in relation to bogus non-resident accounts, but its biggest challenge will be to get to the bottom of what went on between the Revenue and AIB in 1991.